One of the country’s largest health systems, Dallas-based Tenet Healthcare Corporation, has signed an agreement to move into the Tucson market.
The for-profit company, which owns 81 hospitals and has more than 125,000 employees, has signed a “definitive agreement” to create a three-way partnership where it will be majority owner and operator of the Tucson-based Catholic Carondelet Health Network, officials announced Wednesday.
The transaction is expected to close by October and is still subject to regulatory reviews, a news release says.
The Carondelet Health Network, which has about 4,000 employees, will become a “for-profit, tax-paying company”, Tenet officials said. A company spokesperson on Wednesday said financial terms of the transaction and partnership are not being disclosed.
Missouri-based Ascension is the current owner of the non-profit network, which includes three Southern Arizona hospitals — the 25-bed Carondelet Holy Cross in Nogales, Arizona, and the 486-bed Carondelet St. Joseph’s and 400-bed Carondelet St. Mary’s hospitals, both in Tucson. The health network in recent years has been struggling financially.
St. Mary’s, St. Joseph’s and Holy Cross had losses in fiscal 2013 that totaled $32 million, Carondelet reported to the Arizona Department of Health Services. The previous fiscal year, the losses were a much worse $100 million.
Ascension is expected to have a minority interest in the new partnership, along with San Francisco-based non-profit Dignity Health, according to a joint news release.
The joint venture will maintain Carondelet’s Catholic heritage and identity through an agreement with the Roman Catholic Diocese of Tucson, the release says. Additionally, Carondelet’s existing charity care policies will remain in place, officials said.
“The new ownership arrangement is a great boost to health care in Southern Arizona,” says an internal memo from Carondelet president and CEO James K. Beckmann. “It will allow Carondelet to pursue strategic growth initiatives, invest in capital improvements and continue to advance quality of care for our patients.
“Additionally, it will connect Carondelet to a larger, growing regional healthcare network, as well as strengthen and grow Carondelet’s wide range of relationships in the community.”
Tenet officials on Wednesday would not comment about whether all of Carondelet’s current employees will keep their jobs.
Hospital mergers and acquisitions are a nationwide trend, where smaller hospitals and health networks are joining with larger health systems.
Earlier this year, Phoenix-based non-profit Banner Health acquired the Tucson-based University of Arizona Health Network, making Banner Health the largest health system in the state as well as the largest private employer in Arizona. It operates 28 medical centers in seven states.
An Oct. 15 bond offering from Dignity Health said the Carondelet deal would switch 60 percent of the Tucson-based health network’s ownership to Tenet.
The 288-page document also says that 20 percent each would be owned by Dignity Health and by Ascension. Dignity would pay $30 million for its share of the network, which includes three Southern Arizona hospitals, the offering says.
Tenet and Dignity already separately own and operate hospitals and clinics in the Phoenix area and together manage an accountable care organization called the Arizona Care Network.
The partnership will connect Carondelet to the accountable care organization and provide local patients increased access to care, “strengthen and grow Carondelet’s relationships with physicians, provide employee development opportunities for current and future employees and fund strategic growth initiatives across Southern Arizona,” according to the news release.
Carondelet has a long history in the Tucson community.
The Sisters of St. Joseph of Carondelet opened St. Mary’s — Arizona’s first hospital — in 1880. St. Joseph’s opened in 1961, and the nuns began managing Holy Cross in 1981.
